Household income 6.1% below 2007 levels

Although median household incomes in the USA have started to recover, they are still 6.1% below the December 2007 level, and 4.4% below June 2009, when the “economic recovery” began, according to a report by Sentier Research.

The report was written by Gordon green and John Coder, who both used to work at the U.S. Census Bureau.

The authors describe the recovery in household incomes as “moderate”.

After taking into account changes in consumer prices, median household income in the USA dropped during the Great Recession from $55,480 in December 2007 to $54,478 in June 2009.

Median household income continued to shrink during the “economic recovery” – during this time unemployment rates remained high.

In August 2011, average household incomes fell to $50,722. By June 2013 they rose to $52,098 (seasonally adjusted estimates).

Median household income is now 7.2% lower than it was in January 2000. The authors explained that all the figures in this report refer to gross income (before tax) and are presented in terms of June 2013 dollars.

Gordon Green said:

“This latest report continues our efforts to help chronicle one important dimension of the economic hardships now being experienced by a large number of American households. Our findings complement data on the unemployment rate, GDP estimates, leading economic indictors, and other economic data series. In many ways, median household income provides a measure of the net effect of economic activity on the middle class and how well they are able to buy food, housing, and other necessities every month, especially now during this unprecedented period of economic stagnation.”

He added:

“Based on our data, almost every group is worse off now than it was four years ago, with the exception of households with householders 65 to 74 years old. For some groups of householders – Blacks, men living alone, young and upper-middle age brackets, part-time workers, the unemployed, females with children present, and those with only a high school degree or some college but no degree – the declines have tended to be larger than average. Changes in educational attainment during the economic recovery have played a key role in the findings, as we describe in the report.”

Below are some highlights from the report:

Incomes for both family and non-family households dropped considerably.

In family households, median income dropped from $67,804 to $65,225 (3.8%).

Married-couple household incomes fell by 2.6%, compared to 7.5% for households with single mothers with children present.

In non-family households, median income shrank by 7.8%, from $33,815 to $31,166. Men living alone earned 9.1% less, compared to women living alone whose incomes declined by 6.5%.

Median income for householders aged less than 25 years dropped from $34,680 to $31,343 (9.6%).

For householders aged from 55 to 64 years, incomes fell from $62,842 to $58,432 (7%).

Householders aged 65 to 74 years saw their income rise by 5.1%, from $40,885 to $42,984. This was the only age-group to see a statistically significant increase in median income.

Median income for households with an unemployed householder fell from $41,806 to $33,036 (21%). Households with an unemployed person present experienced the steepest declines in income. The authors say that this partly reflects the continued high long-term unemployment rate.

Median income in households with a working householder fell from $71,191 to $68,275 (4.1%). Full-time workers had smaller declines than people working part-time.

For a White (not Hispanic) householder, median incomes fell by 3.6% (from $60,139 to $58,000). For a Black (not Hispanic) householder the decline was 10.9% (from $37,617 to $33,519). Households with a Hispanic householder saw incomes fall by 4.5% (from $42,931 to $40,979).

The economy has been recovering slowly and inconsistently

The American economy has not grown as rapidly and consistently as many economists and lawmakers had predicted.

This summer, President Barack Obama says economic growth is his main focus. He acknowledged that people have not yet seen the benefits of the economic recovery so far.

Low wages and high profits

According to The Guardian “the USA sits at the top of the global low paid league table of wealthy nations”. The United Kingdom, with over one fifth on low pay, is second in that table. The proportion of people on low pay in the UK today is nearly double what it was in the 1970s.

The Guardian added that while pay remains low in both countries, company profits have done well.

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